Seven Eleven Japan Co.

Pruthvi Raj Bogi (08) Madhurima Chakravarty (09) Pooja Dadlani (10) Uttam Das (11) Click to edit Master subtitle style Shatabdi Das (12) Ankita Aggarwal (13) Tanusmitha Ghosal (14) Rolly Gupta (15)
Presented By: PGDM (RM) 2010-12

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Case Study - Abstract

Facts About the Company: Seven Eleven Japan was established in 1973 and had set-up its

first store in Koto ku, Tokyo

It realized a phenomenal growth between the years of 1985 to 2003 The company is owned by Ito Yokado Group owner of

supermarkets in Japan

The new concept of convenient store in Japan was immediate hit -

within 5 years it had 2001 stores 1990s downturn

Was amongst few business areas that continued to grow during

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Case Study Abstract (Contd)

Franchise System

It developed an extensive franchise

network

It included both company- owned stores

and third-party owned franchises

It based its fundamental network

expansion policy on a market-dominance policy stores supported by distribution center

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It was built around a cluster of 50 to 60 Adhering to its dominant strategy - it

Case Study Abstract (Contd)

Store Information and Services The store offered a choice of 5000 SKUs -

each store carrying on average of about 3000 SKUs items, Frozen items and Room Temperature items

Broadly classified into : Chilled items, Warm

Had in-store payment system 7dream.com - An e-commerce company

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Case Study Abstract (Contd)

Integrated Store Information System

Total Information System installed in every

outlet and linked to headquarters, suppliers and distribution centers and terminal control equipment

POS system comprising POS cash registers Integrated Services Digital Network (ISDN)

was installed linking its 5000 stores in Japan and Hawaii

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Case Study Abstract (Contd)

Distribution System

It tightly linked the entire supply chain of

all product categories

Major objective being was to carefully

track sales of items and offer short replenishment cycle times

It was flexible enough to alter delivery

schedules depending on customer demand

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Question No: 1
Method for Responsiveness Integrated information systems Risk of Method Incompatible systems, systems not completely integrated, but piecemeal, and breakdowns. Overinvestment in capacity, underutilized capacity Additional inventory carrying costs Increased transportation costs Additional inventory carrying costs 5/5/12

Additional capacity (manufacturing, DCs, retail stores) Increased safety inventory Increased number of deliveries Increased product variety and availability

Question No: 2
When the supply and demand are not

matched, and inventory excesses and shortages occur matching supply and demand.

forecast accuracy absolutely crucial to microHowever, their information ordering and

replenishment systems can respond quickly to changes in customer demand to account for forecast errors. capacity (capacity fluctuations), and additional transportation costs.5/5/12

Increases the risk of excess or insufficient

Question No:3 Facility location

Frequent and small deliveries to stores which

have limited storage space.

Products are grouped by the cooling needs v Combined delivery system: frozen foods, v Such group products are cross-docked at

chilled foods, room temperature, hot foods distribution centers(DCs)

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Contd
The number of truck deliveries have reduced

from 70 in 1974 to 11 in 1994

Have many outlets, at convenient locations,

close to where customers can walk

It places its stores in clusters, that are

supported by distribution centers(DCs)

Food DCs store no inventory Delivery arrives from over 290 plants

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Inventory management
They manage inventory through their Graphic

order terminal and receive inventory using the scanner terminal. very detailed level.

Their POS register also tracks inventory at a They also manage deliveries to match

demand by time of day

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Transportation
Taking advantage of clustering stores around

DCs allows Seven-Eleven to provide efficient and responsive deliveries to their stores.

They use a combined delivery system. They also make deliveries during off-peak

hours.
The DCs do not carry inventory, but are

actually cross docking facilities.

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Information
Quick access to up-to date information High speed data network linking stores,

headquarters, DCs and suppliers

Store hardware Store computer Graphic order terminal Scanner terminal for receiving POS registers linked to store computer
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Question No: 4 Benefits of direct store delivery policycoordination flexibility responsiveness

managing fewer relationships- retail sores do 5/5/12 not have to work with vendors but with the

Question No: 4 (Contd) Direct store delivery is appropriate for, An emergency shipment or unique one-time items that are heavy or bulky. Direct store delivery is not appropriate, unless one store, in serving the local preferences, sold an item with high demand uncertainty that was not sold in any other stores. For e.g, seven eleven, japan.
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Question No: 5
From the view of customer
1. they can easily pick up their online purchase

from convenience store the sender

2. they dont need to disclose their address to

From the view of seven- eleven

1. Allowing customer to pick up their parcel 2. Increase the customer to visit the

convenience store & raise the sales figure

.Size and number of store( 10615 in japan and 5/5/12

5798 in US)

Question No:6

The fact that stores are not as The pros of this clustered as in Japan will impede approach are illustrated by the responsiveness that is a the success of this concept cornerstone of Seven-Eleven in Japan: highly responsive Japan. system that has increased Direct store delivery is also used, its efficiency through the there is more coordination required use of information. in the U.S. and more relationships They are able to effectively to manage. match supply and demand. The common distribution centers may also be forced into holding 5/5/12 some level of inventory because of the lack of clustering in the U.S.,

Question No:7 Pros

A distributor brings much more value to the

table in the United States relative to Japan. distributor is able to aggregate deliveries across many competing stores.

Given the lower density of stores, a

This allows a distributor to reach levels of

aggregation that cannot be achieved by a single chain such as Seven-Eleven. replenish the store is that they dont have to invest in DCs or trucks to perform this task.
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The largest benefit of having a distributor

Question No: 7 (Contd) Cons

The downside is the lack of control and the

increased number of relationships that must be managed at the store level. Responsiveness may also not be as great. managing these relationships than others and service levels will not be consistent among the stores.

Some store managers will be more adept at

This also creates more potential problems for

upper management in overseeing the franchises to ensure consistent customer service. 5/5/12

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